Help for housing troubles

Settlement funds will help beleaguered homeowners and legal-aid groups

Elizabeth Boyle, managing attorney at Gulfcoast Legal Services in Sarasota,
talks last September with Porfirio and Mabel Cuadra. Gulfcoast is among the
many nonprofit legal-aid agencies that should benefit from the state's
decision to allocate funds from a mortgage-fraud settlement with major
banks.

STAFF PHOTO / ELAINE LITHERLAND

Published: Sunday, January 20, 2013 at 1:00 a.m.

Last Modified: Friday, January 18, 2013 at 6:33 p.m.

It is impossible to undo all the damage done by mortgage fraud and the real estate crisis in Florida. Too many Floridians were wronged or harmed, too many were denied justice or the remedies they were offered came too late to avoid hardships, including financial ruin.

But meaningful steps to mitigate the damage -- funded by a multibillion-dollar settlement with the nation's five largest mortgage services -- remain warranted and welcome.

Florida was one of 49 states, along with the federal government, to sue Bank of America, Wells Fargo, JPMorgan Chase, Citi and Ally/GMAC for fraud. The corporations agreed to settle the lawsuit.

About $7.5 billion of Florida's share of the settlement goes directly to borrowers in the form of loan modifications, including principal reduction and other relief. The use of that money is under the review of the federal Office of Mortgage Settlement Oversight. (For more information about the office and the program's benefits, go to: www.mortgageoversight.com/).

The agreement, reached last April, also allocated $334 million for Florida Attorney General Pam Bondi to administer. According to the terms, the money is to be used to help avoid preventable foreclosures, ameliorate effects of the foreclosure crisis and enhance law enforcement efforts against financial fraud.

Stalemate ended

Bondi wanted to disburse the money last year, but legislators claimed that only they had the authority to appropriate funds; the Legislature doesn't convene in its annual session until March 5.

In November, Bondi, Senate President Don Gaetz and House Speaker Will Weatherford reached a principled deal to end the stalemate and release $60 million from the settlement before the annual session -- contingent upon approval of the Legislative Budget Commission.

The commission approved the appropriation last week, providing an encouraging sign that reaching compromises and fulfilling commitments are possible.

According to Bondi's office, the $60 million will be spent as follows: $35 million for down-payment assistance through the Florida Housing Corp.; $10 million for housing counseling; $5 million for state courts to help with foreclosure-related issues; $5 million to help fund legal-aid programs; and $5 million provided to the attorney general's office to reimburse the office and continue its efforts to remedy abuses of the foreclosure process.

These are all sensible uses of the settlement funds.

It's encouraging that Bondi and legislators recognized the need to help fund the nonprofit legal-aid organizations that provide free counsel to low-income Floridians.

During and after the recession, legal-aid groups -- such as Legal Aid of Manasota and Gulfcoast Legal Services -- were deluged with pleas for help from residents facing home foreclosures and financial crises.

At the same time, private-sector funding of legal aid plummeted and Gov. Rick Scott unwisely vetoed two $2 million appropriations to providers. (Twenty-three other states allocate funds to legal-aid agencies that protect residents in civil cases.)

In light of the need for legal help and the magnitude of the settlement, $5 million is a smaller appropriation than is warranted. We would have preferred that more money be directed to legal aid and less than the $74 million legislators moved to the general fund by assessing "civil penalties."

Nevertheless, $5 million will provide valuable assistance to the organizations, the clients they serve and local economies. (Florida TaxWatch, a business-oriented think tank, found that public expenditures on legal aid promote economic well-being by keeping Floridians out of court, in their homes and at work.)

More funding possible

Fortunately, a portion of the remaining $200 million could easily and properly be allocated to legal-aid agencies. Effective initiatives, such as the State Housing Initiative Program and the State Apartment Incentive Loan Program, would also be worthy recipients of funding. SHIP is for down-payment assistance and rehabilitation of foreclosed homes; SAIL finances construction or rehabilitation of affordable rental units.

Other states, such as California, were quick to direct unencumbered settlement dollars to the general fund, undermining the intent of the agreement.

To that end, we credit Bondi, in particular, for insisting that most of the money is spent as intended and outlined in the settlement agreement.

Now it's up to the Legislature, in its annual session, to follow suit.

<p>It is impossible to undo all the damage done by mortgage fraud and the real estate crisis in Florida. Too many Floridians were wronged or harmed, too many were denied justice or the remedies they were offered came too late to avoid hardships, including financial ruin.</p><p>But meaningful steps to mitigate the damage -- funded by a multibillion-dollar settlement with the nation's five largest mortgage services -- remain warranted and welcome.</p><p>Florida was one of 49 states, along with the federal government, to sue Bank of America, Wells Fargo, JPMorgan Chase, Citi and Ally/GMAC for fraud. The corporations agreed to settle the lawsuit.</p><p>About $7.5 billion of Florida's share of the settlement goes directly to borrowers in the form of loan modifications, including principal reduction and other relief. The use of that money is under the review of the federal Office of Mortgage Settlement Oversight. (For more information about the office and the program's benefits, go to: www.mortgageoversight.com/).</p><p>The agreement, reached last April, also allocated $334 million for Florida Attorney General Pam Bondi to administer. According to the terms, the money is to be used to help avoid preventable foreclosures, ameliorate effects of the foreclosure crisis and enhance law enforcement efforts against financial fraud.</p><p>Stalemate ended</p><p>Bondi wanted to disburse the money last year, but legislators claimed that only they had the authority to appropriate funds; the Legislature doesn't convene in its annual session until March 5.</p><p>In November, Bondi, Senate President Don Gaetz and House Speaker Will Weatherford reached a principled deal to end the stalemate and release $60 million from the settlement before the annual session -- contingent upon approval of the Legislative Budget Commission.</p><p>The commission approved the appropriation last week, providing an encouraging sign that reaching compromises and fulfilling commitments are possible.</p><p>According to Bondi's office, the $60 million will be spent as follows: $35 million for down-payment assistance through the Florida Housing Corp.; $10 million for housing counseling; $5 million for state courts to help with foreclosure-related issues; $5 million to help fund legal-aid programs; and $5 million provided to the attorney general's office to reimburse the office and continue its efforts to remedy abuses of the foreclosure process.</p><p>These are all sensible uses of the settlement funds.</p><p>It's encouraging that Bondi and legislators recognized the need to help fund the nonprofit legal-aid organizations that provide free counsel to low-income Floridians.</p><p>During and after the recession, legal-aid groups -- such as Legal Aid of Manasota and Gulfcoast Legal Services -- were deluged with pleas for help from residents facing home foreclosures and financial crises.</p><p>At the same time, private-sector funding of legal aid plummeted and Gov. Rick Scott unwisely vetoed two $2 million appropriations to providers. (Twenty-three other states allocate funds to legal-aid agencies that protect residents in civil cases.)</p><p>In light of the need for legal help and the magnitude of the settlement, $5 million is a smaller appropriation than is warranted. We would have preferred that more money be directed to legal aid and less than the $74 million legislators moved to the general fund by assessing "civil penalties."</p><p>Nevertheless, $5 million will provide valuable assistance to the organizations, the clients they serve and local economies. (Florida TaxWatch, a business-oriented think tank, found that public expenditures on legal aid promote economic well-being by keeping Floridians out of court, in their homes and at work.)</p><p>More funding possible</p><p>Fortunately, a portion of the remaining $200 million could easily and properly be allocated to legal-aid agencies. Effective initiatives, such as the State Housing Initiative Program and the State Apartment Incentive Loan Program, would also be worthy recipients of funding. SHIP is for down-payment assistance and rehabilitation of foreclosed homes; SAIL finances construction or rehabilitation of affordable rental units.</p><p>Other states, such as California, were quick to direct unencumbered settlement dollars to the general fund, undermining the intent of the agreement.</p><p>To that end, we credit Bondi, in particular, for insisting that most of the money is spent as intended and outlined in the settlement agreement.</p><p>Now it's up to the Legislature, in its annual session, to follow suit.</p>